Healthpeak Properties, Inc. (DOC) Earnings Call Transcript & Summary

Welcome to the 9:55 a.m. Tuesday session at Citi's 2023 Global Property CEO Conference. I'm Michael Griffin with Citi Research, and we're pleased to have with us Healthpeak and CEO, Scott Brinker. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those in the room or the webcast, you can sign in on to liveqa.com and enter code GPC23 to submit any questions if you do not want to raise your hand. Scott, we'll turn it over to you to introduce Healthpeak and any members of management that are with you here today, provide any opening remarks, and then we'll get into Q&A.

Okay. Sounds good, Michael. Thank you. Great event. So joining me today are Pete Scott, our CFO for 6 years now. He's got the balance sheet in great shape. Tom Klaritch, who has run our medical office business for about 20 years now with great skill and producing exceptional results. And then Andrew Johns, runs IR for the company. So Healthpeak is an S&P 500 company. We're primarily focused in life science and medical office. Those are 2 businesses driven by really 2 fundamentals. The aging population and the desire for improved health. And we've chosen to focus our portfolio and resources in those 2 sectors because we think we have a competitive advantage, driven by 2 decades of operating experience, significant scale expertise and relationships. And we think that creates a competitive advantage in both ownership and operations. And that's led to some really strong results out of the portfolio. We're unique in that we've got a significant number of trophy campuses. We put in our investor deck. It was published on Monday, just 9 examples. There are others that we could have included, but those 9 alone produced more than $400 million of NOI and several more to come through our land bank, whether it's in San Francisco with our Vantage project, or in Cambridge with our Alewife development project. So in a lot of real estate sectors, our view as you minimize risk through diversification. In our view, in life science and medical office, it's exact opposite. You minimize risk by having critical mass in core submarkets and with leading health systems, and that's how we built our portfolio, and it's produced best-in-class type at or near top of the peer group same-store growth through the cycles. I don't necessarily have anything else, Michael, in terms of the introduction, we can just turn it to Q&A.

Great. Thanks, Scott. I appreciate those opening remarks. We're starting each of these sessions with the same opening questions. What are the top 3 reasons investors should buy Healthpeak's stock?

Yes. I'd start with visible growth. So we comfortably underwrite more than $200 million of upside in NOI when comparing 2022 to 2025. It's a combination of development and redevelopment deliveries as well as same-store growth. So that's about a 20% increase for our company over that 3-year period. So that would be #1. #2 would be the unique trophy-type campuses that I just described, both in life science as well as projects like Medical City Dallas in the medical office portfolio are truly unique and differentiated, and we think will outperform more stand-alone type projects with smaller owners. And then the third thing I'd point to is that in the public markets, sentiment and fundamentals don't always match up, over time, they do. There was maybe a point in 2021 where the public sentiment was overly positive about life science, and we took more of a view that nothing goes to the sky and positioned our portfolio accordingly. Today, we would feel like the fundamentals are better than the sentiment. And to that point, late last week, I used about half of my own after-tax 2022 cash bonus to buy stock in Healthpeak because I felt like -- while I acknowledge that cap rates have changed and asset values are down over the past couple of quarters, I felt like the stock was just certainly low in terms of the price.

Putting your money where your mouth is [indiscernible]. All right. Let's start off with life science. Despite some concerns predominantly on the private and small cap biotech side, as you mentioned, the demand and underlying fundamentals for life science real estate remains solid. You noted in your investor deck that you've had tenants raised about $2 billion worth of funding since June of last year. Are you seeing anything out there, at least in the near term that might get you more cautious? Or do you think that those longer-term drivers remain intact that should be poised for growth in the years to come?

Yes. Michael, I'll take that. It's Pete here. And by the way, great event again. Our view is that the long-term demand drivers remain strong. Scott mentioned the aging demographic advances in scientific discovery as well as the desire for health. I mean, those will be drivers that will benefit the life sciences sector for many, many years to come. If you think about our portfolio, and we sometimes sound like a broken record when we say this, but we are 99% occupied. Rent growth in 2022 was in the mid-single digits. So overall, we still think it's a healthy market. Demand has slowed from the peak, and we acknowledge that. But we're still signing deals actually in our investor deck. We disclosed that we've signed so far year-to-date 300,000 square feet of either leases or LOIs and that's up since our call. Companies with positive readouts are actually able to access the equity markets despite the choppiness that we're seeing out there. There's also some data in our investor deck on that. But from a follow-on offering perspective, there's been about $2 billion of follow-on offerings for tenants within our portfolio over the last 6 months. M&A as well as collaborations and partnerships between biotech and pharma continues to be quite strong. We actually believe you'll see more M&A out there as pharma is sitting on $500 billion plus of buying power right now in cash. And in the near term, I would say that the biggest issue we're probably dealing with right now is too many companies went public too soon, right? And so you're seeing them try and extend their cash runways to get to those positive readouts. And I think that is a big issue that will work itself through the system during the course of 2023. But we feel like the fundamentals are strong, very long term. And we're obviously going to deal with some of the short-term choppiness from a capital markets perspective, but we still feel like demand, albeit down from the highs, is still quite strong.

Pete, maybe we could just start there on the M&A environment. I mean, you've highlighted some of the tenants in your tenant roster. I think about turning point being acquired by Bristol-Myers or Dicerna being acquired by Novo Nordisk. We're hearing that big pharma is on -- sitting on record piles of cash. I guess what's the opportunity set there for them to come in, acquire maybe these smaller companies, bolster the credit quality? And then typically, when they do acquire a smaller company, will they usually keep the existing real estate footprint?

Yes. It's a good question, and we get that question a lot. First and foremost, when these M&A transactions do happen, the acquirer has the obligation to assume the lease, right? There's no way to get out of that lease. And I'd say each situation is different, right? It's hard to say that there's one way in which this plays out, and I'll give you 2 examples. Turning Point, which you mentioned, was acquired by Bristol-Myers, and they've made the decision that they're not going to move into the real estate yet. They're on the hook for 12 years of lease term, and they will take the subleasing risk. There's a shadow pipeline associated with that, which we certainly acknowledge, but we get a nice credit upgrade at Bristol-Myers on the lease. In fact, Bristol-Myers is a top 3 tenant of ours, and we've never done a direct deal with them. Every deal has been done effectively through M&A is how we've gotten our exposure with them. But then on the other end of the spectrum, you look at Novo Nordisk buying Dicerna, and we've talked a bit about that Dicerna lease in Boston. Novo Nordisk has made the decision that they actually want to consolidate their operations, at least in the Northeast into that Hayden campus, right? And they're looking to grow, and they're actually investing a lot more of their capital into that building beyond the TI package that we've offered them. And that's a wonderful thing for us, and they have even more appetite to take more space within that campus. So that's really the bookends that you see with regards to M&A. I'd say, most times, it's a credit upgrade and tenants look to invest more into the property. But within select circumstances, you'll see a credit upgrade, and then they'll look to sublease the space.

And can you just remind us typically what the composition is of these facilities? Is it 70% wet lab, 30% traditional office space for sales, marketing, management, how does that fluctuate?

Yes, it's generally more 50-50. It's one of the reasons we prefer the purpose-built labs because you just have more flexibility. So if anything, today, we might build a higher percentage of lab than we had in the past. The biotech sector, although they certainly need to be in the office, they do have a back office component, especially as they become a more mature company with sales and marketing, et cetera, that a greater percentage of their office would trend to true traditional office. That's not as true of the earlier stage companies where it's much more focused on the scientists themselves. But having the purpose-built real estate allows us to flex the building. So it can be a traditional office building if that's what the tenants want and are willing to pay the rent. But we can go as high as 70% to 75% lab inside of our purpose-built assets. When you think about a conversion property, a lot of times, you're challenged to get anywhere close to 50% lab and sometimes a lot less. So it's one of the many reasons that despite the euphoria of the market in 2020, 2021, we remain consistent with our longer-term strategy, which is we want to have purpose-built product in the core submarkets, and importantly, more of a campus model as opposed to stand-alone buildings.

And then just on that leasing number that you mentioned a bit earlier, the 300,000, I guess, how does that compare to initial expectations for 2023? And I know, you highlighted that the portfolio is about 99% occupied. So it seems like there's not as much potential for occupancy upside there. But those tenants, are they ones expanding with you? Or are they new relationships? Is it kind of a mix?

Yes, it's a mix. And there's always some proactive activity in terms of -- one of the reasons we like the campus model and have this critical mass is that biotech tenant might sign a 10-year lease, but more likely than not, over the next 5 years, they're going to need more space or less space. And when we have that critical mass, it allows us to move tenants around proactively. And some of the leasing that we've done so far this year is exactly that. We're on the same big camp. One tenant wants less space, another tenant wants more space, and we can proactively swap tenants. So there's some of that happening. And then we've continued to have great success in South San Francisco, in particular, at our 2 redevelopment campuses, Pointe Grand and Oyster Point, right in the heart of South San Francisco. Our view is, of the 3 core markets, that's the most favorable, at least for us, from a supply-demand standpoint. It does help that we have the best located product and 40% market share and a lot of tenant relationships. So when we think about what's happening at the industry level, people could have a different view. But when we think about it from Healthpeak's perspective, we're winning more than our fair share battles of leasing activity in South San Francisco and feel really confident about our pipeline there.

Can we just expand a bit on your commentary there about South San Francisco because I think we might have been hearing from others that it might be one of the softer biotech markets out there. So maybe is there something different that you're seeing from a tenant demand perspective? Is it Healthpeak's ability and scale in that submarket to drive results? Or anything you're seeing there would be helpful.

Yes. I think it gets to some of the points I made earlier that have been significant critical mass and scale in a local submarket is hugely important. So 80% of our leasing in any given year is done with our existing tenants. And we have 40% market share in what's the biggest 1 submarket in the whole world for biotech, South San Francisco, 15 million square feet with more to come, and we own 40% of the investor-owned product. Some of you have done the site visit. When you're in a car, like your neck gets sore because you're turning your head every 3 seconds looking at a Healthpeak building. It makes a huge difference when we're competing against maybe a smaller landlord or stand-alone owner trying to lease up space has competed against the broader market, all broker-led deals. I'm not sure some of our activity even shows up in the leasing stats because it's an existing tenant. They just come directly to us.

And then just maybe expanding on markets in general, even within the core biotech market, submarket scale matters. So I think about Torrey Pines in San Diego, I think about Cambridge and Boston. How important is it to build that critical mass in those important submarkets versus maybe a development in the CBD area of San Diego, which may not be as brighter biotech market?

Yes. No, it's huge. We purposefully -- strategically made the decision a couple of years ago that the market could slow down. We certainly enjoyed the dramatic leasing activity, how it existed, but we didn't go out and buy a bunch of random assets, secondary markets, conversions. We haven't put anything under construction in the last year. It's 1 reason that we feel like our portfolio is in fantastic shape for the slowdown that has occurred. So we don't have much unleased development space. We have very little vacancy in our portfolio. And frankly, we have very few lease maturities. I think we have 30,000 feet of lease maturities in Boston in the next 3 years. It might be 50,000 feet in San Diego. So we're well prepared for the slowdown that has occurred and that was purposeful. And even with our 99% exposure in the 3 core markets where there's the greatest depth of demand, we're even more concentrated in individual submarkets, like in San Diego, we're exclusively in Torrey Pines and Sorrento Mesa usually in a campus setting. So there might be something happening in Carlsbad, or Oceanside or Downtown, but is that competitive? Not really. In Boston, we're exclusively, at least today, in West Cambridge in Lexington, where we have campuses and significant market share, and we're getting great leasing activity when we do have vacancy. And certainly, in South San Francisco, you know that's our biggest market. I mean, that's the ultimate definition of local scale. So we're not super spread out by MSA. And even within those 3 core markets, we're extremely concentrated in specific submarkets that we believe in.

Is there any thought or interest in maybe expanding your presence and maybe some of those nontraditional core biotech markets? I think about Seattle, I know you just sold those assets in RTP, so maybe not that one, but Maryland is another one that comes to mind. Any thought about expansions into markets like that?

[indiscernible] see us do in traditional biotech in other markets anytime soon. I guess looking far enough forward anything could happen. But what's much more likely, in our view, is to more tightly glue our 2 segments together. So we think about some of the pure-play competitors. Well, you already have pure-play peers that you can invest in. We don't want to be a pure play. We want to have something different, and we do think we're uniquely positioned to put together more interesting, differentiated way our medical office business with our life science business in that when you think about the underlying industries, they're actually tightly connected, mean where do you think all the clinical trials happen? Inside hospitals. Where do you think most of the pharmaceutical spending occurs? It's inside hospitals. And a number of our health system relationships have significant R&D functions. We have a number of labs inside of our medical office buildings today, like [indiscernible] a couple of months ago in Nashville that's sponsored by HCA that would rival anything that you would see in South San Francisco. And given our expertise and relationships across those 2 businesses, if we were to do R&D outside of the 3 core markets, it's much more likely to be affiliated with a health system in a core MOB market as opposed to trying to do a biotech-focused lab building and pick the market. I don't see us doing that. We just have so much opportunity in the 3 core markets where we have the depth of demand and the competitive advantage.

And then -- I appreciate the comments there. It seems like your thoughts sort of around the diversification strategy, maybe there are some back-end synergies that can be realized behind that, but just like why that necessarily makes sense at this juncture if there are the pure plays out there? And maybe any commentary around that.

I just covered some of it, and I mean there's a real life example. Late last week, Mayo Clinic in Phoenix is doing a 3-million-square-foot development inpatient, outpatient and R&D. There's going to be more of that type of product, and we think we're particularly well positioned to participate in that type of activity, which would only be possible as more of a kind of somewhat diversified life science, medical office focused REIT. So we see a real opportunity to be a key player in those -- in that intersection of those 2 businesses. But bottom line, Mike, I mean we're always open-minded to things that would create long-term value for shareholders. So it's something that we've analyzed in the past. We consider analyzing it in the future, but objectively, you couldn't possibly say that 2 smaller pure plays would be a good outcome for shareholders today. When you think about the change in cost of capital, whether it's debt and/or equity, the duplicative G&A, trying to refinance all of the debt at today's interest rates, I mean it's hard to imagine anybody could make a compelling case that we should have 2 smaller pure-play REITs. But if at some point in the future, it made overwhelming economic and long-term strategic sense, then, yes, we'd have to consider that. I mean we would take actions that are in the best interest of our shareholders, but we just don't see that as something that's interesting today. And by the way, for a number of years now, our same-store growth has been at or near the top of the peer group in both sectors. So it's not like there's some shortcoming operationally that would argue for more focus.

Maybe just a couple more questions on life science, and then we'll dig into the other business lines. Just on the leases that you were talking about earlier, the ones that are expiring, I know you put a slide in your investor deck about this, but the mark-to-market potential on that and then maybe in the out years, if you could highlight that for a bit.

Yes, I can take that. If you go back to our November investor deck, we did put a lot of detail out there on that mark-to-market. We still see it as being a 25% benefit. And to put that in NOI terms, that's around $145 million of NOI, but we do have a weighted average lease term and the approximate 6-year range. So we can't just get at that $145 million overnight. That'll be wonderful if we could, on a present value basis, that's around $100 million of value there. So we feel like we've got good long-term tailwinds behind us from that mark-to-market perspective. On the guide for this year, the 3% to 4.5%, which I think was part of your question, but if not, I'm happy to talk about it. Again, I will repeat the 99% occupancy does limit the type of same-store growth that you can generate in any given year, plus the fact that we've got the in-place lease term, that does drive same-store growth. So really, the 3% to 4.5% this year is mostly just the escalator benefit that we're getting. And a lot of that mark-to-market will come a couple of years down the road and beyond. So I don't know if there's anything else you want to cover on that individual topic. The one other thing I will point out, just to add on to what Scott said, the last 4 years, Andrew gave me a statistic this morning, our same-store growth within life sciences was 6%, right? So that's quite good. And some of that benefit was occupancy going from the mid-90s to the high 90s right now. Once you're at the high 90s, it's kind of hard to go even higher than we are just given the amount of tenants and the role that we do have. So 3% to 4.5% did jump out of people. We got a lot of questions on that topic. We've done our best to explain the reasons for that. It's not necessarily a deceleration of fundamentals within the real estate life sciences aspect. But it certainly is still, we think, pretty healthy growth.

Appreciate that, Pete. And then just on the tenant watch list, recently, the news about the bankruptcy at Sorrento, I think it's about 2% of ABR. Some of the expectations around the development, I think they're scheduled to take occupancy in the second quarter of this year. I know there's a certain amount of time that they would have to take after filing bankruptcy to accept or reject the leases, but any commentary or thoughts you have around that would be helpful.

Yes. One new update is we did get paid our March rent from Sorrento even while they're in Chapter 11 reorg. They did get DIP financing in place. They have approval from the courts to utilize $30 million of that $75 million DIP financing, and they submitted a budget that includes paying their real estate rent for the next 3 months, and that included March. So we think April and May is included within that as well. So that's a positive development. Sorrento is a unique situation, right? I don't know that we have enough time on that clock to go through all the intricacies of what's going on there. It's a different bankruptcy than a winding down of operations, right? They have about 20 different drugs that they're working on. They have assets of over $1 billion and liabilities of around $250 million. So that is more of a liquidity crunch. Obviously, it's unfortunate because it gets a lot of press for us. And even though they're in Chapter 11 reorg, they're still paying rent. We don't know what's going to happen with the leases there. That will still run its way through the process there. And hard to tell what happens with the development lease. All that said, we do think that, that will get delayed, whether they accept or reject the leases and that lease in particular. So hard to say, but we feel like all the assets, all the leases they have, the 5 different leases, that is the one that if they did reject it, we feel like we have the easiest opportunity to release it since it's a brand new development, and they actually haven't taken occupancy at this point in time. And then on the remainder of the watch list, we're always going to have a watch list, right? I mean that's just the nature of the biotech industry. Our tenants signed 10-year leases, yet they don't have 10 years necessarily of cash on their balance sheet, right? So our watch list is a combination of qualitative and quantitative. I think the biggest quantitative thing we look at is cash runway. So any tenant that has less than a year of cash runway will likely show up on that watch list, but we also pay attention to other things like other utilizing the space. Are they trying to sublease the space? And the balance of the watch list is 3% of total ABR within life sciences, right? Life sciences is 50% of our overall portfolio. And to the extent that there were to be any additional tenant bankruptcy for the balance of the year, we see minimal impact, if any, on our 2023 numbers for that. Sorrento was different, right? It's a big exposure, and we had a big straight-line rent impact on that. But the balance of the watch list would have minimal impact on 2023.

That's helpful. Maybe switching over to medical office, we've got to give Tom klaritch something to talk about. But just given the medical office fundamentals, expected to remain steady state, call it that 2% to 3% expected same-store growth in '23. Is there anything that you could see that maybe could surprise to the upside there? And then I know some commentary, Scott, I think you've had and we've talked in the past or on calls that you might be seeing some more attractive opportunities in the off-campus setting as opposed to on. I know the medical office portfolio is predominantly I think it's about 80% on campus. So maybe we'd just start with that, just growth expectations and on versus off-campus.

Yes. I think when I think about that, we spent about 2.5 decades building what I think at least is one of the higher quality portfolios in the business. We've got a great platform, 50-plus seasoned executives that have anywhere from 10 to 25 years managing medical office. So you couple that with the fact of some of our unique campus as Scott mentioned, Medical City Dallas, and I know, Michael, you're taking a group there in May, I believe. That campus is an integrated campus. You don't see that very often in the business. 2.2 million square feet made up of both medical office space as well as a lease on the hospital. In that lease, we actually benefit from the success of the hospital, and that's helped to drive some of our outsized results over the past couple of years. That hospital has historically been one of the more profitable hospitals in the U.S. So when you look at all that, we -- for the past 4 years, we've averaged about 3% same-store growth, which is at the high end of what you typically tend to see. We actually did 4% in 2022. And given where '23 has started, I would say, at a minimum, I'd hope that we'd at least be at the high end of that 2% to 3% range. And then when you think about the off-campus assets, I know we've historically talked about our on-campus assets, which, again, I think, are a big driver of our growth. We spent the better part of our business building that portfolio, and we're 81% on-campus. But that doesn't mean we don't like off-campus assets, especially when you have an asset that has a sponsorship by a good health system, has a lot of hospital outpatient type departments in it, especially acute care services like cancer treatment or radiology. So we do like those type of assets, and we'll continue to look for those in the future.

Yes. And I mean, make no mistake, on-campus MOBs are lower risk than off-campus. I don't care who you ask. If they tell you otherwise, they're not telling the truth. And we have 2 decades of experience and data to support it. We just have greater depth of demand in the hospital, as long as it's performing, is your anchor tenant. And it typically takes at least half the building either directly or indirectly. Now the fact is, all the MOBs in the country, only about 30% of them are on campus. So fortunately, we own a lot of them. The problem is they're hard to find. The chances of buying an on-campus MOB any point in the cycle is pretty low. So if your only growth opportunity is on-campus MOBs, it's a very small amount of opportunities, and a lot of them are owned by health systems, and they don't monetize very often if ever. And a lot of the development go to most hospital campuses, at least the leading hospitals that we'd want to affiliate with, they're jampacked. There's nowhere else to go. So unless you're going to tear something down, so the only way to do a new development. So that happens occasionally. But for the most part, if you want to grow the business, the opportunities are in off-campus MOBs. And the point we were trying to make is, we're open-minded to looking at those because some of them are actually fantastic pieces of real estate. They have the great sponsorship, they're bigger, so they have the critical mass of activity that draws physicians and patients that have the higher acuity services. So the health system is more likely to stay in the building longer term. They generally come with a higher initial cap rate. So for those assets, we are open-minded to doing more. But today, we're 81% directly on the campus. It's not like that's going to go to 30%, right, in 10 years. That -- so don't misinterpret what we're saying. It's just we are open-minded to doing some off-campus real estate as long as it has the criteria of its bigger health system affiliation, more critical care, outpatient services to really anchor that hospital there long term.

And then just maybe one on MOB cap rates. I think we've seen some expansion in there, probably, call it, over the last 6 to 9 months. But I mean, anything you're seeing over there, we're hearing any from the range of the low to the mid-6s, but any commentary you've got there would be helpful.

Yes, I think that's probably a good estimate right now. Unfortunately, there's not been a lot of trades going on, but everything we see and people we talk to would lead you to believe the low 6s for high-quality MOB is kind of where things are at. Obviously, they go up as the quality drops, but I would agree with that.

And then maybe just touching on external growth opportunities. I know you've been big developers in the past. Obviously, that's been a growth engine. But Scott, your commentary on the recent earnings call suggests that acquisitions might be looking more attractive in today's environment. Just anything you could expand on there? Is the development yield has come down? Is it the acquisition cap rates have come up? Just kind of walk us through your thought process there.

We look at both of those things. So at least for us, the last years development made overwhelming sense, which is why we did a lot of it, right? We're not developing at any cost because we like to develop. We developed because the economics were so favorable. We've been delivering a couple of hundred million dollars of development for the last 5 years and the average return is in the 8% range. 8% usually fully leased before it delivers when acquisition cap rates were probably in the 5% range and our cost of capital is around 5%. So that's a pretty healthy earnings spread and value creation spread that justified development. Today, construction costs have continued to climb. Rents maybe haven't kept up. So return on cost is a little bit lower than it had been. Meanwhile our, and anybody else, it's publicly traded, their cost of capital is a little bit higher. Acquisition cap rates are clearly higher so that development spread has shrunk. And if it's not sufficient, then it doesn't make sense to develop. It's just a different point in the cycle that we'd be more open-minded to acquisitions today is cap rates have clearly come up. We have started to get phone calls from the types of sponsors and projects that you would not have received those calls or would not have been competitive a year ago. Now we'll have to see where our own cost of capital settles. It's pretty dynamic right now, a lot of volatility, but it wouldn't surprise me for the next year or 2, acquisitions, risk-adjusted returns made more sense than development. But we'll see. It's volatile.

And then just maybe lastly on the CCRC portfolio. You exited the traditional senior housing a couple of years back. I know you talked about you wouldn't do anything. You don't have to do anything kind of near term on that. But given that the focus of growth looks to be in the life science and the MOB portfolio, where do you think the CCRC component fits in the piece of the pie longer term?

Came within a minute and 30 seconds.

You know I have to get it in there.

Yes. So it's 10% of our business but takes more than 10% of our time internally and externally, this meeting notwithstanding, but it's big. It's $120-plus million of NOI. And something of that scale in today's capital markets is -- we're not selling it for cash. I mean, nobody's writing equity checks that big. And certainly, the lending environment isn't conducive to a cash sale. So I think the expectation should be we continue to operate it in 2023. It's performing really well. Most of it's here in Florida, high barriers to entry, good occupancy recovery, rents are growing strongly. But at some point, when the valuation makes sense, we don't view that as core to our business. We'd rather take the capital if the pricing makes sense and redeploy into the things we want to do long term.

I've got my 3 rapid fires to end the session. All right, best real estate decision today, buy, sell, develop, redevelop or pause?

Redevelop.

Same-store growth expectations for 2024 for MOBs and life science?

Yes, MOB 3%, life science 4%.

And will there be more same or the fewer publicly traded REITs a year from -- publicly traded health care REITs a year from now?

Same.

Great. Thank you so much.